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Amazon and eBay sellers avoiding VAT

The HMRC are investigating if Amazon and eBay can be made to pay for outstanding VAT bills owed by overseas traders using the online platforms.

Earlier this week a Guardian investigation found that "hundreds of high-value gifts including Apple watches, iPads, Fitbits and Panasonic cameras are being sold on Amazon’s UK website without VAT being charged."

According to the paper, record numbers of small overseas sellers who are not paying VAT have imported goods into Britain, with Amazon dispatching the stock from its UK warehouses.

Many of these VAT-free sellers give virtual office or residential addresses in China, Hong Kong and the USA.

Prices available on Amazon.co.uk are sometimes dramatically cheaper than those offered by high street retailers, which charge VAT. In other instances, small overseas sellers offer prices that match, or are close to, those available in stores, keeping the missing VAT.

An iPad Air, sold by Apple and Argos for £319 (including VAT of £53.17), is offered on Amazon by a Chinese seller for £282. The Guardian contacted the seller asking if it could provide a VAT receipt. The seller responded: "We are sorry that we are not VAT registered."

The Guardian ordered goods worth £1818.20 and paid no VAT on the bill. VAT on most goods is charged at 20% in the UK.

During a short debate on Monday December 21st, Conservative peer Lord Lucas claimed Amazon and eBay had been "collaborating with hundreds of overseas retailers to defraud the taxman of millions of pounds every day."

The allegation is vehemently denied by both.

A Treasury spokesman told the House of Lords that HMRC had set up a taskforce to investigate VAT evasion by overseas internet sellers. Urgent meetings with senior figures at Amazon and eBay took place last month.

The firms have insisted responsibility for charging the correct VAT lies with sellers using their sites. Amazon and eBay have said they help sellers understand their tax obligations, but have no duty to police compliance. Both said they cannot be held liable in cases of evasion.

Amazon declined to answer the Guardian's questions regarding potential VAT abuse by overseas sellers using its website and warehouses.

In a statement, it said: "Marketplace sellers are independent businesses responsible for complying with their own VAT obligations. We do offer tools and information to assist sellers with their compliance, but we don’t have the authority to review their tax affairs. Naturally, we cooperate with HMRC as we are required to by law."

eBay said it too helps sellers with VAT compliance. "We are committed to working with HMRC to ensure our sellers are complying with their legal obligations", it said.

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